“We remain encouraged by our performance within our key vertical markets
during the first quarter, driven by our initiatives to drive customer
engagement,” said Ilan Levin, Chief Executive Officer of Stratasys. “In
addition, we believe that strong utilization of our installed base of
systems was demonstrated by steady growth in consumables and customer
support revenue during the period, while improved focus resulted in
reductions in our operating expenses.”

Recent Business Highlights:

Demonstrated continued traction in our strategic focus on customer use
cases and deepening collaboration with many industry leaders:

Siemens Mobility announced the manufacture of customized
production parts that include housing covers for the couplers on
the front of trams, utilizing Stratasys FDM technology for German
transport services provider Stadtwerke Ulm/Neu Ulm (SWU) Verkehr
GmbH, which resulted in a significant reduction in lead times and
tooling costs.

McLaren Racing expanded its production of final race-ready parts
and manufacturing tools for the new McLaren MCL32 Formula 1 race
car, utilizing Stratasys FDM and PolyJet 3D Printing Solutions.

Announced a strategic agreement with SIA Engineering Company
(SIAEC), a major provider of aircraft maintenance, repair, and
overhaul services in the Asia-Pacific region, to help accelerate
the adoption of 3D printed production parts for commercial
aviation by establishing a Singapore-based Additive Manufacturing
Service Centre that offers design, engineering, certification
support, and part production to SIAEC’s well-established network
of partners and customers.

Showcased the use of Stratasys PolyJet 3D printing technology, by
Queen Elizabeth Hospital in the United Kingdom, for the
construction of advanced maxillofacial cutting guides and
anatomical models.

Enhanced customer-centric solution offerings with launch of the
Stratasys Expert Services Group in North America, to help
manufacturers build their additive manufacturing strategy and workflow
to recognize the benefits of 3D printing for improved production
processes.

Announced the Stratasys Continuous Build 3D Demonstrator, a new
additive manufacturing platform demonstrating low volume production
and mass customization, featuring a modular multi-cell design and
cloud-based architecture. The new technology demonstrator targets
applications that include education Rapid Prototyping labs as well as
volume manufacturing environments that can benefit from part
production without tooling and from zero-inventory supply chains.

Announced a strategic investment in LPW Technologies, a developer of
metal powders and metal powder management systems; and entered into a
strategic partnership with Desktop Metal, a manufacturer of metal 3D
printing systems, that will enable leveraging Stratasys’ distribution
channels for the sale of their innovative solutions.

“We are pleased with the progress we are making in developing
applications that are driven by the specific needs of our customers,”
continued Levin. “We believe that this deeper customer engagement will
help us to provide significant value and grow the adoption our products
and services. Our recent announcements with Siemens Mobility and SIA
Engineering, as well as the early success of our collaboration with
McLaren Racing, illustrate the potential value that can be created by
our extensive knowledge and capabilities.”

Financial Guidance:Stratasys today reiterated previously
provided guidance for 2017. The Company’s guidance for projected revenue
and net income (loss) for the fiscal year ending December 31, 2017 is as
follows:

Revenue guidance of $645 to $680 million.

GAAP net loss guidance of $53 to $39 million, or ($1.00) to ($0.73)
per diluted share.

Non-GAAP net income guidance of $10 to $20 million, or $0.19 to $0.37
per diluted share.

Stratasys provided the following additional guidelines regarding the
Company’s projected performance and strategic plans for 2017:

Non-GAAP operating margin guidance of 3% to 5%.

Capital expenditures guidance of $40 to $50 million.

Given the expected ongoing negative impact of not recording a tax
benefit on U.S. tax losses on the Company’s non-GAAP net income, the
Company believes that the rate of growth in its non-GAAP operating
income will be the best measure of performance.

Non-GAAP earnings guidance for 2017 excludes $34 million of projected
amortization of intangible assets; $18 to $20 million of share-based
compensation expense; $2 to $3 million in merger and acquisition related
expense; and $8 to $10 million in reorganization and other related
costs; and includes $3 to $4 million in tax expenses related to non-GAAP
adjustments.

Stratasys Ltd. Q1 2017 Conference Call Details

The Company plans to hold a conference call to discuss its first quarter
financial results on Tuesday, May 16, 2017 at 8:30 a.m. (ET).

To participate by telephone, the domestic dial-in number is (855)
319-2216 and the international dial-in is (503) 343-6033. The access
code is 10010178.

Investors are advised to dial into the call at least ten minutes prior
to the call to register. The webcast will be available for 90 days on
the "Investors" page of the Stratasys Web site or by accessing the
provided web address.

For nearly 30 years,Stratasys
Ltd. (NASDAQ:SSYS) has been a defining force and dominant
player in 3D printing and additive manufacturing – shaping the way
things are made. Headquartered in Minneapolis, Minnesota and Rehovot,
Israel, the Company empowers customers across a broad range of vertical
markets by enabling new paradigms for design and manufacturing. The
Company’s solutions provide customers with unmatched design freedom and
manufacturing flexibility – reducing time-to-market and lowering
development costs, while improving designs and communications. Stratasys
subsidiaries include MakerBot and Solidscape, and the Stratasys
ecosystem includes 3D printers for prototyping and production; a wide
range of 3D printing materials; parts on-demand via Stratasys Direct
Manufacturing; strategic consulting and professional services; and the
Thingiverse and GrabCAD communities with over 2 million 3D printable
files for free designs. With approximately 2,400 employees and 1,200
granted or pending additive manufacturing patents, Stratasys has
received more than 30 technology and leadership awards. Visit us online
at: www.stratasys.com
or http://blog.stratasys.com/,
and follow us on LinkedIn.

Stratasys and FDM are registered trademarks, and the Stratasys signet,
PolyJet and Continuous Build 3D Demonstrator are trademarks of Stratasys
Ltd. and/or its subsidiaries or affiliates. All other trademarks belong
to their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys' strategy, and
the statements regarding its projected future financial performance,
including the financial guidance concerning its expected results for
2017, are forward-looking statements reflecting management's current
expectations and beliefs. These forward-looking statements are based on
current information that is, by its nature, subject to rapid and even
abrupt change. Due to risks and uncertainties associated with Stratasys'
business, actual results could differ materially from those projected or
implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to: any failure to
efficiently and successfully integrate the operations of Stratasys Ltd.
and various entities that it has acquired, including MakerBot, Solid
Concepts, Harvest and GrabCAD, or to successfully establish and execute
effective post-acquisition integration plans; changes in the overall
global economic environment; the impact of competition and new
technologies; changes in the general market, or in political and
economic conditions in the countries in which we operate; any
underestimates in projected capital expenditures and liquidity; changes
in our strategy; changes in applicable government regulations and
approvals; changes in customers’ budgeting priorities; lower than
expected demand for our products and services; reduction in our
profitability due to shifting in our product mix into lower margin
products or our shifting in our revenues mix significantly towards our
AM services business; costs and potential liability relating to
litigation and regulatory proceedings; and those factors referred to in
Item 3.D “Key Information - Risk Factors”, Item 4, “Information on the
Company”, and Item 5, “Operating and Financial Review and Prospects” in
our 2016 Annual Report on Form 20-F, filed with the SEC on March 9,
2017, as well as in the 2016 Annual Report generally. Readers are urged
to carefully review and consider the various disclosures made throughout
(i) the Report on Form 6-K that attaches Stratasys’ unaudited, condensed
consolidated financial statements as of, and for the quarter ended,
March 31, 2017, and its review of its results of operations and
financial condition for those periods, which has been furnished to the
SEC on or about the date hereof, (ii) Stratasys’ 2016 Annual Report, and
(iii) Stratasys’ other reports filed with or furnished to the SEC, which
are designed to advise interested parties of the risks and factors that
may affect our business, financial condition, results of operations and
prospects. Any guidance provided, and other forward-looking statements
made, in this press release are made as of the date hereof, and
Stratasys undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.

Use of non-GAAP financial measures

The non-GAAP data included herein, which excludes certain items as
described below, are non-GAAP financial measures. Our management
believes that these non-GAAP financial measures are useful information
for investors and shareholders of our Company in gauging our results of
operations (x) on an ongoing basis after excluding merger and
acquisition related expense and reorganization-related charges, and (y)
excluding non-cash items such as stock-based compensation expenses,
acquired intangible assets amortization, impairment of goodwill and
other long-lived assets, changes in fair value of obligations in
connection with acquisitions and the corresponding tax effect of those
items. We also exclude, when applicable, non-recurring changes of
non-cash valuation allowance on deferred tax assets, as well as,
non-recurring significant tax charges or benefits that relate to prior
periods which we do not believe are reflective of ongoing business and
operating results. These non-GAAP adjustments either do not reflect
actual cash outlays that impact our liquidity and our financial
condition or have a non-recurring impact on the statement of operations,
as assessed by management. These non-GAAP financial measures are
presented to permit investors to more fully understand how management
assesses our performance for internal planning and forecasting purposes.
The limitations of using these non-GAAP financial measures as
performance measures are that they provide a view of our results of
operations without including all items indicated above during a period,
which may not provide a comparable view of our performance to other
companies in our industry. Investors and other readers should consider
non-GAAP measures only as supplements to, not as substitutes for or as
superior measures to, the measures of financial performance prepared in
accordance with GAAP. Reconciliation between results on a GAAP and
non-GAAP basis is provided in a table below.